Level 2 or Level 3 Processing - Purchasing Cards

Level 2 or Level 3 Processing - Purchasing Cards


Visa and Mastercard have created a specialized type of credit card used primarily by government agencies and businesses. Increasingly, corporations and government agencies are relying on this form of payment to compensate their service providers and suppliers. Businesses benefit by receiving their funds quickly and by winning competitive bids and government contracts where purchasing cards are the required form of payment. The downside, however, is the increased costs associated with receiving these payments. These costs will usually be much higher than accepting a standard consumer credit card.



The solution is that some businesses may qualify for ways to process these transactions that allow them to pay lower fees if they can supply additional information, called "level 2 or level 3 data". For example, if government transactions are over $5,000, businesses can significantly reduce their transaction costs by including "level 2 or level 3 data" about the purchase along with each transaction. Examples of level 2 or level 3 data is a purchase order number associated with the transaction that the credit card will be paying. This data is passed on to the purchaser so that it may be many times easier to reconcile the transaction. If all the required data is not collected and passed on during the transaction, the merchant can have surcharges added to the basic fees or be forced into a non qualified transaction category.